Press Release

JCR-VIS Reaffirms IFS Rating of The Pakistan General Insurance Company Limited

Karachi, January 15, 2016: JCR-VIS Credit Rating Company Limited has reaffirmed the Insurer Financial Strength (IFS) rating of The Pakistan General Insurance Company Limited (PGI) at ‘A-’ (Single A Minus). Outlook on the assigned rating is ‘Positive’. The previous rating action was announced on December 12, 2014.
With operations spanning more than two third of a century, the company has built-up adequate equity base in relation to its size. PGI’s leverage indicators are on the lower side depicting ample room for growth. The company posted considerable growth in gross premium during 2014, though still lower than some of its peers. PGI has posted higher profitability in 2014 largely driven by improved underwriting results; investment income, though lower YoY, continues to support the bottom line. Primarily with the decline in insurance debt, strong liquidity has been witnessed vis-à-vis total liabilities of the company.
The company’s business mix is led by Fire segment, which represents more than half of the total business volumes, followed by marine and engineering businesses. PGI has a cautious approach towards motor business. Incidence of claims remained within manageable limits. Going forward, while retaining adequate underwriting quality, the company plans to largely maintain the business mix with slightly enhanced focus towards bond/guarantee and motor (tractors) business. The company has applied for window takaful operator license to the SECP for the initiation of takaful operations and is awaiting a formal approval.
PGI has an adequate reinsurer panel featuring ‘A-’ and above rated reinsurers for both proportional and non-proportional treaties. Pakistan Reinsurance Company Limited (PRCL) is the lead reinsurer. Treaty terms for all segments remained unchanged for 2015. Overall cession increased in 9M15 largely on account of lesser cover of proportional treaties. With expansion in business volumes and favorable claims experience, the company posted higher underwriting profitability on a timeline basis.
With availability of surplus liquidity, total investments stood considerably higher by end-2014 and onwards. The company has an investment portfolio with almost three fourth of its exposure in TDRs while remaining is mainly deployed in government securities and equities; credit and market risks associated with the portfolio are considered manageable. Over the years, the investment portfolio has generated steady stream of income and supported the bottom line of the company.
For further information on this rating announcement, please contact the undersigned at 021-35311861-70 (10 lines) or Mr. Maimoon Rasheed at 042-35723411-13.

Jamal Abbas Zaidi
Advisor

Applicable Rating Criteria: General Insurance (November, 2003)
http://www.jcrvis.com.pk/images/methodology.pdf

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